As of midday Monday, WGMI was higher by 13% since the start of the year. An undoubtedly impressive showing when considering the largest cryptocurrency and its peers are mired in multi-month slumps. There are a few explanations for the ETF’s January showing. One is bullishness on some of the ETF’s holdings’ evolution from crypto-focused companies to important cogs in the AI revolution.

WGMI components Cipher Mining (CIFR) and Terawulf (WULF) landed “overweight” ratings in new coverage by Morgan Stanley analyst Stephen Byrd. Not surprisingly, the analyst’s bullish views on those stocks largely revolve around those companies’ AI competencies.

“At a macro level, once a bitcoin company has a built-in data center and entered into a long-term lease with a creditworthy counterparty, that DC’s natural investor habitat is not among bitcoin investors but among infrastructure investors,” he wrote in a note to clients.

Byrd noted that Cipher isn’t likely to command multiples on par with traditional data center real estate investment trusts (REITs). However, there is room for the valuation to grow as its data center exposure does the same.

“We use the phrase ‘REIT endgame’ to describe our valuation approach because, ultimately, these contracted DCs should be owned by REIT-like investors that appropriately value long-term, low-risk contracted cash flows,” added the analyst.

Terawulf is another rising player in the data center arena. Even if it only reaches base case data center assumptions over the next few years, it could be a winner.

“TeraWulf has a strong track record of signing agreements with data center customers, and the management team has extensive experience in building a wide range of power infrastructure assets,” says the Morgan Stanley analyst.

For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.